Guernsey Bank Deposits Fall

by Jason Gorringe, Tax-News, London

08 June 2011

The value of deposits held by banks in Guernsey fell by GBP5bn (4.3%) during the final quarter of 2010, figures from Guernsey's Financial Services Commission show.

The decline means that the total value reached GBP111bn at the end of December 2010 – a contraction of GBP6.4bn (5.4%) over the year.

Peter Niven, Chief Executive of Guernsey Finance, the promotional agency for the island’s finance industry, said:

"It’s disappointing to see the fall in the value of deposits held by banks in Guernsey but the low interest rate environment and the effects of exchange rate movements were the principal contributing factors."

"Low interest rates mean that customers feel more inclined to move out of cash and into other forms of investments such as securities. At the same time, we have also seen the effects of exchange rate movements all pushing in the same direction and therefore having a depreciative impact on the value of deposits when expressed in Sterling terms."

"The economic conditions mean that this contraction in deposit values is not a surprise and indeed, it is a pattern seen with some of our competitors."

The banking deposit figures are in stark contrast to the strong growth in the value of funds business announced by Guernsey Finance earlier this month.

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